Novartis may shut Maharashtra plant

Swiss pharmaceuticals giant Novartis is planning to shut its sole manufacturing facility in India, at Mahad in Maharashtra. Novartis makes the anti-tuberculosis bulk drug, Rifampicin, here, but cheaper imports, primarily from China, have taken a toll on it.

The multinational company may even put the unit on the block. Ranjit Shahani, vice-chairman and managing director of Novartis India, told Business Standard, "We are open to all options regarding the plant."

Novartis was reviewing the future of the plant also because of the periodic lowering of prices by the National Pharmaceutical Pricing Authority and the excess capacity in the market, a Novartis spokesperson said. Moreover, the removal of import duty on Rifampicin has led to a flood of imports of the drug from countries like China.

The market price of Rifampicin has dropped to Rs 3,400 per kg from Rs 3,700 in March. This is far lower than the government-determined price of Rs 4,200 per kg.

Bulk Rifampicin contributes around 6 per cent to Novartis India's total turnover of around Rs 471 crore (Rs 4.71 billion). Despite several cost-control measures initiated at the facility, the operations have continued to be unviable.

A company spokesperson said: "We are evaluating all possible options that will be in the best interests of the business. If and when this option is exercised, we will buy bulk Rifampicin from the market."

Novartis India has been relying on third-party sourcing instead of manufacturing and also imports from the parent's global operations.

On the current scenario in the generic industry, the company said there was potential for generic players in the Indian and global market since more drugs would go off patent in the future. Besides generics, the company has a major presence in the over-the-counter and animal health segments.